I've been doing a bit more analysis on the IO versus P&I approaches. Every deal I analyse givers far greater long term benefits from P&I (factoring in any annual profit / loss plus the equity gained by paying the mortgage down). This blew me away. I had heard so many "experts" saying IO was the way to go that I just assumed it was. I guess I'm the kind of person that needs to see it myself to believe it.
The thing I am still weighing up is that using IO I could quite easily build up an income stream of $20k+ p.a. in the next year or so with the equity I have available. That's quite attractive. On the other hand, if I am prepared to sacrifice this short term income I could have a far greater one in 10 - 20 years time. Hmmmm, delemas!
When doing the calculations on my own properties, I find I would have to commit money each year to meet the principle payments. Is anyone in the same situation? I guess after a while the snowball effect starts to happen and the profits from properties that you have owned for a while go into supporting the newer ones.
If you haven't committed your own cash, and are planning to pay off the mortgage in less than the standard 25 year period, it suggests to me that you are getting some huge gross returns. Perhaps I haven't set my sights high enough!
Comments appreciated.
Thanks
Gerrard
The thing I am still weighing up is that using IO I could quite easily build up an income stream of $20k+ p.a. in the next year or so with the equity I have available. That's quite attractive. On the other hand, if I am prepared to sacrifice this short term income I could have a far greater one in 10 - 20 years time. Hmmmm, delemas!
When doing the calculations on my own properties, I find I would have to commit money each year to meet the principle payments. Is anyone in the same situation? I guess after a while the snowball effect starts to happen and the profits from properties that you have owned for a while go into supporting the newer ones.
If you haven't committed your own cash, and are planning to pay off the mortgage in less than the standard 25 year period, it suggests to me that you are getting some huge gross returns. Perhaps I haven't set my sights high enough!
Comments appreciated.
Thanks
Gerrard
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